Certified Government Financial Manager (CGFM) Practice Exam

User fees are charges imposed by governmental entities for specific services or the use of facilities, and one of their defining characteristics is that they can be used to regulate or control activities. This means that the primary motivation for implementing user fees can extend beyond mere cost recovery; they also serve a regulatory function. For example, when governments charge fees for permits or licenses, they may aim to control certain behaviors, manage the use of limited resources, or provide a disincentive for activities that may be deemed harmful to the public interest or the environment. While user fees can indeed be set at various rates, including fixed rates, and may contribute to covering some program costs, they are not limited to these characteristics alone. They do not have to cover all expenditures associated with a program; instead, they can be utilized in a way that reflects both regulatory intentions and cost recovery objectives. Thus, the ability of user fees to regulate or control activities serves as a defining aspect that sets them apart from other forms of revenue collection.